Move to close self-employed ‘loophole’ being examined

Company using person’s services avoids responsibility for paying income tax and PRSI

Rather than the end-user applying the PAYE system in respect of the worker, that function becomes the responsibilty of the worker.

Rather than the end-user applying the PAYE system in respect of the worker, that function becomes the responsibilty of the worker.

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A move to close off a loophole under which people who are, in fact, employees providing services through a company structure looks likely, as a consultation period on the issue comes to a close.

The company using the services of the individual avoids responsibility for paying income tax and PRSI and the fear is that this is causing a loss to the exchequer. Submissions under a consultation process on the issue, being undertaken by the Departments of Finance and Social Protection, are due to be received by Thursday, March 31st.

The use of these so-called intermediary-type structures involves a worker, who might otherwise be engaged as an employee, providing the service through a “personal services company” or a “managed services company”. Rather than the end-user applying the PAYE system in respect of the worker, that function becomes the responsibilty of the worker”.

There are also increasing instances of workers being classified as self-employed even though, “they might not possess the characteristics of risk-taking often perceived as features of self-employment”. The statement warned that these arrangements can undermine the employee’s rights.

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